Mortgage Foreclosure Dispute Resolution Frequently Asked Questions

What is the Mortgage Foreclosure Dispute Resolution (MFDR) Program?

The Mortgage Foreclosure Dispute Resolution (MFDR) program provides an opportunity for owner-occupants of residential property in non-judicial foreclosure to meet face-to-face with their lenders to modify their loans or to work out a payment plan within three months. The program is established and administered by the Department of Commerce and Consumer Affairs – Office of Administrative Hearings (DCCA-OCP) with assistance from the Judiciary.

How can I participate in the MFDR program?

Once the lender files a notice of non-judicial foreclosure with DCCA, owner-occupants of residential property under foreclosure who have lived there for a minimum of 200 days are eligible to participate in the program.

When does the program start?

The program will begin no later than October 1, 2011 and will continue until September 30, 2014.

How does the program work?

Lenders may begin filing notices of non-judicial foreclosure with DCCA once the program begins.

Lenders must file a notice of non-judicial foreclosure with DCCA with a filing fee of $250 which will go to a special fund for the MFDR program.

Upon receiving the notice, DCCA-OCP will send a notice to the owner-occupant regarding the opportunity to participate in dispute resolution, information about the program, a MFDR participation form, and instructions and contact information for the program.

The owner-occupant has 30 days after the mailing of DCCA’s notice to submit the MFDR participation form and pay a $300 nonrefundable program fee. If the owner-occupant chooses dispute resolution, the lender must also pay a $300 program fee.

If the owner-occupant does not submit the form, then the foreclosure process continues to move forward.

Upon receiving the owner-occupant’s MFDR participation form, DCCA will open a dispute resolution case and notify the parties within 20 days of the date, time, and location of the dispute resolution session. The session will be scheduled between 40 and 70 days from this notification date, unless the parties and dispute resolution neutral agree to a different date. In addition, the notice will include information about the dispute resolution process (i.e., rules, requirements, consequences, and penalties for noncompliance).

The foreclosure process is on hold from the time DCCA sends out written notice of the opening of a dispute resolution case.

If the parties are able to reach an agreement during the dispute resolution session, the foreclosure is terminated.

If the parties are unable to reach an agreement during the dispute resolution session, the foreclosure continues to move forward.

A lender who fails to comply with the program may not move forward with non-judicial foreclosure. Additional penalties for noncompliance include fines of up to $1,500.

Who can assist me in seeing if I qualify for loan modification?

It is important for homeowners thinking about loan modification to seek assistance from approved credit counseling agencies. You can find a list of them here

What happens to the non-judicial foreclosure I was facing?

The non-judicial foreclosure process is on hold until the dispute resolution is completed.

Can I choose to go through the judicial foreclosure process?

Yes, however, once you participate in the MFDR program, you cannot convert to judicial foreclosure. Therefore, a decision needs to be made before the MFDR participation form is submitted.

If I am facing non-judicial foreclosure right now, what are my options?

Owner-occupants currently undergoing non-judicial foreclosure have until August 15, 2011 to convert to judicial foreclosure without having to meet certain requirements. After August 15, 2011, owner-occupants wishing to convert from non-judicial foreclosure to judicial foreclosure will have to comply with more demanding requirements. For more information about conversion to judicial foreclosure, please visit the Judiciary’s website. For more information and assistance, please contact the Legal Aid Society of Hawaii nearest to you.

I work for a lender or mortgage loan servicer and I need more information on how the new law affects my company.

Please contact the Division of Financial Institutions at (808) 586-2820 for more information specific to your industry.